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Sherwin-Williams Rings Up Record Q1

Friday, April 19, 2013

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Protective and marine coatings held their own, but Sherwin-Williams' paint stores did the heavy lifting in the first quarter, delivering record sales and earnings for the Cleveland-based paint maker.

Booming architectural sales in the Paint Stores Group drove up Sherwin-Williams' first-quarter earnings by 16 percent, to $116.18 million. Consolidated net sales rose to a record $2.17 billion in the quarter, from $2.14 billion posted the same period a year ago, the company reported Thursday (April 18).

Paint Stores Group
The Sherwin-Williams Company
Sherwin-Williams’ Paint Stores Group saw a 4 percent increase in net sales to $1.17 billion in the quarter. The company is the nation's largest specialty retailer of paint and painting supplies, with a fleet of more than 3,500 paint stores.

Acquisition activity increased net sales by 1 percent in the quarter ended March 31, offsetting the impact of unfavorable currency translation rate changes, the company said.

“We are pleased to report record sales and earnings per share on the continued positive sales volume and strong operating results of our Paint Stores Group,” said Chairman and CEO Christopher M. Connor. The group propelled Sherwin-Williams to record highs for 2012.

Connor called the architectural volume growth across all market segments “impressive, considering the difficult comparisons from a year ago.”

Paint Stores Group on Roll

Sherwin-Williams’ Paint Stores Group saw a 4 percent increase in net sales to $1.17 billion in the quarter, due to increased sales volume across all end markets and higher selling prices, the company said.

Net sales from stores open for more than 12 calendar months increased by 3.2 percent in the quarter over last year’s comparable period. Group segment profit increased by $17.0 million, to $129.7 million, in the quarter.

The company continues to invest in this segment, opening nine net new locations in the quarter.

“For the year, we expect our Paint Stores Group to open 70 to 80 new stores,” said Connor.

Sherwin-Williams is the largest specialty retailer of paint and painting supplies in the U.S., with a fleet of more than 3,500 stores.

Consumer Group Drops

The Consumer Group did not share in the growth spotlight. Net sales in the segment dipped 3.7 percent to $308.6 million in the first quarter.

Sherwin-Williams said it was hurt by the elimination of a portion of a paint program with a large retail customer.

consumer segment
The Sherwin-Williams Company

Consumer Group sales and profits dropped in the first quarter.

"The decrease is due primarily to the previously disclosed elimination of a portion of a paint program with a large retail customer and is partially offset by acquisitions," the company said.

Acquisitions increased net sales 4.9 percent in the quarter.

Segment profit decreased to $54.0 million from $55.3 million reported for the same period last year, the company said, adding that acquisitions did not have a significant effect on the Consumer Group profit.

Global Finishes Gain

However, the Global Finishes Groupcomprised of protective and marine, OEM product finishes and automotive finishes—saw a slight uptick in the first quarter.

Net sales increased 0.8 percent to $486.8 million in the quarter, due primarily to selling price increases and acquisitions.

Segment profits rose to $33.9 million from $28.6 million in the first quarter of last year, due to price increases and improved operating efficiencies.

The gains, however, were partially offset by unfavorable foreign currency translation rate changes, the company says.

Unfavorable currency translation rate changes and acquisitions decreased profits in this segment $1.8 million in the quarter.

S-W protective
The Sherwin-Williams Company

Sherwin-Williams' Global Finishes Group, which includes protective and marine coatings, recorded a net sales increase of nearly one percent.

Connor said the Global Finishes Group and the Latin America Coatings Group were “managing to improve” margins through selling price hikes and good cost control, despite unfavorable currency translation rate changes.

Net sales in the Latin America Coatings Group dropped 2.9 percent to $202.6 million in the quarter.  Unfavorable currency translation nipped net sales by 6.6 percent in the first quarter. Segment profit increased to $20.8 million from $19.9 million posted the same period last year.

The Quarter, Year Ahead

For the second quarter, the company anticipates an increase of five percent to nine percent in net sales, compared to last year’s second quarter. That estimation would put diluted net income per common share in the range of $2.50 to $2.60, compared to $2.17 per share earned in the second quarter of 2012.

“For the full year 2013, we expect consolidated net sales to increase above 2012 levels by a mid-single-digit percentage,” said Conner.

“With annual sales at that level, we are reaffirming our guidance that diluted net income per common share for 2013 is expected to be in the range of $7.45 to $7.55 per share, compared to $6.02 per share earned in 2012.”

Closing in on Comex

The paint maker is also anticipating the closing of its $2.34 billion acquisition of Consorcio Comex of Mexico.

“Our balance sheet is positioned well for the … closing of the Comex acquisition and other investments in our business,” Conner added.

Comex products

Sherwin-Williams is anticipating the closing of the Comex acquisition, announced last November.

That deal, announced in November, will help Sherwin-Williams expand its geographical footprint and product diversity.

Comex, headquartered in Mexico City, manufactures and sells architectural and industrial coatings throughout Latin America, the U.S. and Canada. Sales generated about $1.4 billion in 2011.


Tagged categories: Architectural coatings; Automotive coatings; Business matters; Earnings reports; Economy; Finance; Marine Coatings; Market; Sherwin-Williams

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